Build or Buy? 8 Things to Consider When Investing in Software
Modern consumers have high expectations for great experiences. Brands must invest in the right technology to ensure they’re always ready to deliver on these expectations, but should brands build new solutions in-house? Or does it make more sense to purchase a pre-built, proven solution?
In this post, we’ll address the age-old question of build versus buy. We’ll explore some of the top factors to consider, as well as the questions to ask potential vendors when deciding which approach is right for your business.
What Do Consumers Want and Need?
Consumers Demand Winning Experiences
Modern consumers expect great brand experiences, whether they’re shopping online, in store, or some combination of the two. In fact, according to Salesforce’s State of the Connected Customer 5th Edition, 88% of consumers say the experience a company provides is just as important as its products or services.
Brands Must Prioritize the Customer Experience
Brands are under pressure to deliver great experiences throughout the purchase journey. If they don’t deliver, they’re likely to lose a customer for good. Research from PwC found that one in three consumers will walk away from a business after a single bad experience – even if they loved the brand or product.
Customer experience must be a top priority, but it’s not always easy. Every single interaction a customer has before, during, and after a purchase matters. Consistently delivering great experiences throughout the customer lifecycle involves a number of moving parts.
The Right Software is Essential
Of course, acquiring a software solution doesn’t guarantee a better customer experience. However, the right solutions do play important roles in your ability to meet (and exceed) your customers’ expectations.
Build or Buy?
When you’re considering a new solution that promises to make your life easier (and improve the experiences your customers have with your brand), you’re faced with the age-old question: build versus buy? In other words, does it make sense for your company to develop an in-house solution? Or is purchasing a ready-made solution the best approach?
There’s no right or wrong answer. Instead, it depends on a number of different factors. But what are these key considerations?
We’ll explore eight important factors to consider, as well as several questions you’ll want to ask any potential vendors. With the help of this guide, you can confidently decide whether to buy a solution… or build it yourself.
1. Time to Market
Building even the simplest product or solution requires a serious investment of time. If you’re like most professionals, you don’t have much to spare.
To start, you’ve got to get alignment from all stakeholders on what challenge you’re trying to solve – and how your solution will solve it. Then you’ve got to design and develop your solution. Finally, you’ve got to devote time to thoroughly test it to ensure it does what it’s supposed to do. Of course, this is just a high-level overview of the very complex process of developing a solution.
Each step of the product development is critical. But the entire process takes time – often more time than anticipated. According to a Gallup article of nearly 1,500 IT projects, one in six had an average schedule overrun of almost 70%.
This means that your internally-built solution might not be ready for use for several months – or even longer, depending on complexity.
When you buy a solution, it’s already built. However, that doesn’t usually mean you can start getting value from it right away.
When purchasing a solution, you must consider implementation time, which is the process of adopting the solution and integrating it into your existing workflows. In other words, it’s the time it takes to get your new solution up and running.
Implementation time varies widely based on factors including (but not limited to):
- The size of your organization
- The complexity of the application
- How customized the solution is
Simple solutions, such as setting up a basic FAQ bot with Google’s Business Messages, can be up and running in a week or two. On the other hand, more complex, customized solutions take longer to implement. Be sure to ask any software providers how long they expect implementation to take given your organization’s size, as well as the features and functionality you value most.
Sure, implementation takes time. However, it’s often faster than building your own solution from scratch. When you buy a solution, you can typically start using it (and deriving value from it) much faster than if you were to build one yourself.
3 Questions to Ask Prospective Vendors About Timing
- How long does the typical implementation take for an organization of our size?
- If we need additional features and functionality, how will that impact implementation time?
- When can our organization expect to start deriving value from the solution?
2. Talent and Skills Gaps
If you’re thinking about building a homegrown software solution, you must determine if you have the right skills, experience, and technology to make it happen. In other words, do you have the right people, and do those people have the tools they need to build a winning solution?
Let’s say you do have employees with the right skill sets for the project. Building a new product can take months or longer. That means you’ll be pulling these folks from other initiatives – potentially for a considerable amount of time.
If you determine that you don’t have the right people internally to do the job, you’ll have to find the right resources. This might involve recruiting full-time employees or contractors, engaging agencies and consulting firms, or some combination of the two.
Recruiting candidates is a time-consuming process. This is especially true during the “Great Resignation”, where there has been fierce competition for the best candidates. Recruiting for development resources is particularly challenging, as demand continues to exceed supply. In fact, in October 2021, 40% of tech jobs in the US were classified as “hard to fill” – meaning they stayed on Indeed.com for over 60 days without finding a suitable candidate.
If you opt to purchase a solution, there’s no need to source and onboard additional resources. The vendor should already have the right skills, technology, and experience on staff – and you’ll benefit from it. In addition, your chosen vendor should have established partnerships that will help you maximize efficiency – more on that later on.
Of course, if you decide to buy, you’ll still need to involve internal folks during the implementation process. However, the level of commitment is typically much shorter and less involved. That means your internal resources can return to “regularly scheduled programming” much faster, with little disruption to progress on other lucrative projects.
3 Questions to Ask Prospective Vendors About Talent and Skills
- What internal resources are required for implementation and maintenance of the solution?
- What kind of resources will we have as part of our investment? How much experience does this team bring?
- Will we have access to the vendor’s resources after implementation?
If you’re weighing up whether to buy a solution or build your own, there’s no doubt that cost is one of your top concerns. At first glance, it may seem like building a solution internally is the most cost-effective option. Yet this is often not the case.
Defining the cost of building in house can be tricky. So it’s not terribly surprising that the same Gallup article we mentioned earlier found that one in six IT projects has a cost overrun of 200% on average.
For starters, you must factor in the cost of the talent required to build the solution. Consider the salaries of the new employees or contractors you plan to hire for the project, or the existing employees who have been pulled onto the project. You must also factor in the cost of providing benefits to any new or existing employees. According to the Bureau of Labor Statistics, on average, benefits account for 31% of a total compensation package.
You must also consider the cost of the technology needed to build the solution in house.
In addition to upfront costs, you also need to factor in the people and technology costs you’ll incur in the future, which can be hard to accurately predict. Those include the costs associated with:
- Addressing unexpected bugs and issues
- Maintaining the solution
- Making future enhancements to the solution
Finally, you have to consider opportunity costs. If you use internal resources to build and maintain your solution, you must pull these resources from other important projects and initiatives. Those projects and initiatives may be generating revenue for your company.
For example, perhaps your company is focused on bolstering its mobile presence. By doing so, you’ll be in a better position to attract and convert the growing portion of consumers making purchases via mobile. However, you have to pull development resources from this initiative to build and maintain a new solution. That means your mobile initiatives will be delayed – and it’ll take longer to see a return.
Determining the costs associated with a ready-made solution is much more straightforward. There’s the cost of acquiring the software itself, which might be a per-user or per-organization rate. Many software vendors publish these rates on their website or on their Salesforce AppExchange listing. In addition, you must factor in any additional costs for customizations (a topic we’ll explore in more detail later on) or à la carte services, such as premium support.
Building your own solution isn’t free. It’s important to determine the full cost of both building and buying a software solution. Remember to factor in the costs of the initial build – as well as costs for ongoing maintenance, upgrades, and innovation. Then, you can determine which approach best fits your budget.
3 Questions to Ask Potential Vendors About Costs
- What is the pricing structure of the solution (i.e. per user, per org)?
- How long is the contract period and are there any discounts for longer contracts?
- What is included with this price and what comes at an additional charge?
4. Customization Opportunities (Product and Gaps)
Some businesses assume that existing software solutions are generic and that none perfectly addresses their unique needs. But is building an in-house solution the only way to get exactly what you need out of a solution? Not necessarily.
When you purchase software, you’re typically paying for an out-of-the-box solution with standard features and functionality. However, many software providers also offer the opportunity to customize their solution to fit your exact needs and use cases. Be sure to ask potential vendors what opportunities there are for customizing their solutions to best suit your needs.
3 Questions to Ask Potential Vendors About Customization Opportunities
- Are there opportunities to customize the solution to fit our needs?
- How much do customizations cost?
- What’s the process for adding customizations?
5. Integration with Existing Technologies (Pre-Integration, Accelerator, or One-Click?)
If you’re like most brands, you rely on myriad technologies to run your business. For example, a baby formula brand might leverage Shopify to power its own website, while also selling through retailers such as Target, Walmart, and Walgreens. That brand leverages Bazaarvoice to collect and manage reviews, uses Facebook and Instagram for customer communication, and depends on Salesforce Service Cloud for customer support.
It’s important to ensure any new solution you build or buy ‘plays well’ with your existing technologies. If it doesn’t, it can cause a lot of headaches for both your customers and your internal teams.
However, when you purchase a ready-made solution, you benefit from the vendor’s established partnerships and integrations. Ideally, your chosen vendor should have pre-built integrations to the technologies that matter most to your business. For example, an order management solution should seamlessly integrate with top payment methods – such as Amazon Buy with Prime. A ratings and reviews management platform should integrate with the tools you’re already using to collect and display reviews – including Bazaarvoice, Trustpilot, and Amazon (among others).
Integration needs vary from business to business. However, here are some key integrations to look for with any vendor you’re considering:
- eCommerce platforms
- Marketplaces and channels
- Shipping and fulfillment
- Ratings and reviews
Pre-built integrations mean less work on your end, which means you can get your new solution up and running quickly. This, in turn, means you’ll be well on your way to delivering better experiences to your customers.
Be sure any solution you’re considering integrates with your key technologies. For example, 1440 has established partnerships and integrations with the leading platforms and apps to maximize your team’s efficiency. Your chosen vendor should also have internal experts well-versed on the different technologies you already use.
3 Questions to Ask Potential Vendors About Integration
- Does your solution have pre-built integrations with the technologies our brand already uses?
- If not, what does it take to integrate your solution with our most important technologies?
- Do you have internal experts who are familiar with the technologies we already use?
6. Risk and Customer Success
Building an in-house solution requires a big investment of time and resources. It’s also a risky endeavor, with no guarantee of success. In fact, according to IDC research cited in TechChannel, 25% of IT projects are outright failures, 20-25% don’t deliver ROI, and up to 50% require substantial rework.
On the one hand, if you build a solution in house, you’re taking a gamble that it’ll actually meet your needs, solve your challenges, and deliver a measurable ROI – all without introducing new security risks.
On the other hand, ready-made solutions are battle-tested and proven. They’ve been through hundreds of test runs and have proven themselves to be effective and secure. In fact, vendors often have reference customers that will gladly tell you how the solution has helped them overcome challenges.
Of course, each business is unique. A vendor’s customers might rave about the solution – but that doesn’t guarantee it’ll be the right fit for you. It’s key to ensure a potential solution meets your needs. Typically, there are ample opportunities to vet a given solution (and the company that made it) to ensure it’s the right fit. Let’s explore a few opportunities that can help you mitigate the risk of purchasing a solution that’s not the right fit.
Events: Industry events like Shoptalk, eTail, Dreamforce, and others typically have expo or exhibit halls, which give you the opportunity to chat with a variety of vendors who are already solving challenges similar to yours. Oftentimes, vendors give live demos during these events so you can see their product in action.
The Salesforce AppExchange: If you’re a brand that uses Salesforce, you’re likely to be familiar with the AppExchange. If you’re not familiar, the AppExchange is a marketplace for solutions that can enhance your Salesforce org. On the AppExchange, you can browse more than 3,000 solutions by factors including categories, price, and industry.
When you purchase a solution through the AppExchange, you can rest assured that it’s secure. That’s because all apps are required to undergo a comprehensive security review process.
In addition, the AppExchange features reviews, which means you can read about your peers’ experiences of using the solution you’re considering.
Listings on the AppExchange also offer other features that can help you to further vet the solution, including demo videos and, sometimes, free trials.
Case Studies and Testimonials: Vendors often develop case studies showcasing how their customers are using their solution. Be sure to ask if a prospective vendor has case studies that are specific to your industry or use cases.
In addition, there may be opportunities to speak directly with customers that already use the solution to get more information on their experience using the product and working with the company. Don’t be afraid to ask for references!
Demos: One of the best ways to vet a solution is to see it in action. Most vendors offer free demos, and in some cases, you may be able to take a test run by getting a free trial or trying it out in your Salesforce sandbox.
3 Questions to Ask Potential Vendors About Risk and Customer Success
- Do you have any current customers I can speak to about their experience with your company and your solution?
- Do you have any case studies that are specific to our industry or use cases?
- Are there any opportunities to try out your solution prior to purchase?
7. Ongoing Maintenance and Support
Earlier in this guide, we mentioned that up to 50% of IT projects require substantial rework. Yikes!
Building a solution in house isn’t a one-time event. You’ve got to consider who will be on the hook if an unexpected bug pops up (trust us, it’ll probably happen!) or if more significant refactoring is required. In addition, someone must be on point for maintaining the solution and adding additional enhancements as needed.
Again, this comes back to talent. If you don’t have the right people with the right skills to provide ongoing maintenance to your solution, you’ll be left scrambling to find them. Plus, if you do have the resources, you’ll have to pull them off other projects when your solution needs to be fixed, refactored, or enhanced.
If you purchase a solution from a vendor, you don’t have to worry about ongoing maintenance. That’s because these vendors are responsible for fixing any issues that might crop up along the way. In fact, software providers regularly release new versions of their products that fix known issues. If you come across an issue on your own, you can report it to the company’s support or customer success team.
3 Questions to Ask Potential Vendors About Ongoing Maintenance and Support
- Is ongoing support and maintenance included in the price of the solution?
- What is the process for submitting a support request and how quickly can I expect my issues to be resolved?
- What resources are available to ensure we’re getting the most from your solution?
8. Continuous Innovation
Let’s say you decide to build your own solution. It meets your brand’s needs today, but what about six months or a year down the road?
Consumer behavior is always evolving. Brands must continuously evolve their strategies to keep pace.
If you build your own in-house solution, you must keep a constant pulse on your customers’ preferences and behaviors, as well as the needs of your brand, and be ready to adapt and innovate as necessary. At the risk of belaboring the point, this goes back to the availability of time and human resources. Do you have the internal time and resources needed to continuously innovate and enhance your homegrown solution – all without pulling these resources from other important initiatives?
Winning vendors make continuous innovation a priority. They’re always evolving their products based on customer feedback, as well as new use cases and consumer behavior trends. In particular, smaller tech partners like 1440 are extremely agile, able to adapt and pivot to what is most important to move the needle. We understand what’s happening in the market, and we’re equipped to adjust course accordingly (and quickly).
Startups, in particular, are great tech partners as they tend to be more innovative and more agile than larger businesses. In addition, startups often work closely with customers when developing and iterating on their products to ensure they continue to meet their needs.
When you work with the right vendor, you can be assured your solution will meet your needs today and in the future.
3 Questions to Ask Potential Vendors About Continuous Innovation
- What does your 12-month roadmap look like?
- How often do you release new versions of your solution?
- Do we need to take any action to upgrade to a new version of the solution?
The Bottom Line: Should You Build or Buy?
We’ve explored a lot of the key factors to consider when weighing up whether building or buying a solution is the better approach. So, what’s the right answer?
In reality, there is no right answer. You’ve got to determine what’s right for your brand and your priorities for the coming year.
Truth be told, though, many brands determine that the right approach is to purchase a solution. When you do so, you benefit from proven solutions that are tailored to your unique needs by experts focused on continuous innovation.
When you leave the software to the experts, you can derive value as quickly as possible – and in a way that’s cost effective and predictable. Then you can focus on what matters most: delivering winning experiences that win customers and foster loyalty.